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It's too bad when the actions of a manager cause a lawsuit, but it's important that a company's leaders respond quickly and decisively to ensure that the rogue actions are not indicative of a festering problem.

That appears to be the scenario in which Philadelphia-based Mothers Work finds itself following the company's agreement to pay $375,000 to settle charges of pregnancy discrimination and retaliation with the Equal Employment Opportunity Commission (EEOC).

"It was a very upsetting case for me personally because I'm the founder of the company and founded it as a pregnant woman," says Rebecca Matthias, president of Mothers Work. "We settled because we didn't want a prolonged legal battle ... we felt the best [plan] was to redouble all of our efforts to make sure no type of discrimination can happen."

Mothers Work's Miami-based subsidiary, Motherhood Maternity, was accused of refusing to hire qualified female applicants because they were—of all things—pregnant, a violation of the Pregnancy Discrimination Act. Further, a former Motherhood Maternity assistant manager complained that the Miami subsidiary disciplined and fired her because it was thought she was pregnant.

In the settlement, Mothers Work agreed to a 3-year consent decree under which Motherhood Maternity will pay the assistant manager $135,000 in compensatory and punitive damages, $50,000 in back pay and $130,000 for her attorney's fees. Motherhood Maternity also will pay $20,000 in compensatory and punitive damages to three other women who claimed to have been denied employment because of their pregnancies.

"My attitude is that she felt she was discriminated against ... that she felt that is an indication that we need to take it seriously, so I didn't get bogged down about the legalese," says Matthias.

Matthias launched Mothers Work out of her home and as a catalogue in 1982. She has seen it grow to 1,500 locations nationwide and employs more than 5,000 people. The company does not have a diversity director or department, but Matthias says she is considering it.

In response to the settlement, Mothers Work is developing new training and checks and balances. The company will train all team members nationwide and audit their compliance with fair-hiring practices, reported Matthias in a statement.

"Our business revolves around serving the apparel needs of pregnant women and we encourage having team members who are also pregnant and can provide firsthand product knowledge to our customers," Matthias stated,

The terms of the Florida settlement required training only of certain Mothers Work staff members in Florida, but the company has made it mandatory that all of its employees, who are in charge of hiring, submit to a two-hour course to review requirements of fair-employment law.

Beyond training, Matthias instituted an employment-auditing system that uses secret applicants. The secret applicants will pose as real job seekers to help detect potential discrimination.

"We thought, 'Let's go the extra mile and ensure that training and efforts [to correct discriminatory behavior] are having an effect,'" says Matthias. "That's one thing that came out of this matter."

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